Business plan guidance for lending firms

Follow this guidance if you're preparing a business plan as part of your application for authorisation as a lending firm.

If you're applying for authorisation as a lending firm, you will have to complete a business plan that covers the key areas.

Some applications take longer because the business plan is not detailed enough. Our sample business plan explains the main things that your plan should include.

You should also consider the points below, which are specific to lending firms.

Guidance for all types of lending firm

Your business plan should explain:

  • whether your firm has identified a business opportunity or customer base
  • where customers will be sourced from, with details of any lead generators or brokers
  • the services (both regulated and non-regulated) your firm will sell as well as the areas you specialise in
  • the experience your firm’s governing body or senior management have of the regulated activities you wish to carry out
  • the background and experience of everyone performing senior management functions (including their employment background and copies of relevant qualifications/examinations)
  • your long-term strategy as well as your financial projections
  • fees and how they are explained to the customer
  • promotions and communications, including how they comply with CONC 3

Unsecured credit lenders

Your business plan should explain:

  • a summary of your firm’s positioning in the credit market and how your products compare to competitors
  • a summary of any security or guarantees your firm has and how customers are notified of this
  • how you deal with customers who are in arrears on their repayment (including methods of contacting the customer, assessments of whether they are in financial difficulty and details of any forbearance)
  • details of any second charge mortgage business
  • full details of how employees or agents of your firm will be paid
  • payments to lead generators or brokers

Pawnbrokers

Your business plan should explain:

  • procedures for mitigating the risk of fraud/crime (eg how you establish ownership of the pledged item)
  • how you ensure the accurate valuation of items
  • what happens if the customer wishes to redeem their item including details of how you calculate and communicate to the customer (before contract completion) interest and other charges

Home collected credit firms

Your business plan should explain:

  • the number of agents who distribute your firm’s loans
  • details of how agents are paid
  • the geographical spread of your firm’s activities
  • how you oversee agents, including training, monitoring, required documentation, payment, recruitment (including due diligence carried out on the agent)
  • complaints handling and debt collection (including assessment of whether the customer is in financial distress and when to apply forbearance)

High-cost short-term credit firms

Your business plan should explain:

  • how your firm refinances its high-cost short-term credit agreements
  • how much income is expected from loans repaid and how much from fees/charges for late payment
  • full details and demonstration of algorithmic-based systems
  • an estimated percentage of loans which will not be repaid on, or before, the original due date, as well as the reason for this
  • interest and charges applied to your high-cost short-term credit agreements, how these are communicated to the customer and how they comply with CONC 5A rules on the cost cap

If you arrange high-cost short-term loans on an electronic system, please tell us how your firm makes sure it doesn’t impose or collect charges in excess of the cost cap – as explained in CONC 5A.3.

Hire purchase

Your business plan should explain:

  • whether the asset is taken if there are arrears (and any forbearance considered)
  • a summary of your firm’s positioning in the credit market and how your products compare to competitors
  • details of any immobiliser or equivalent used
  • complaints handling how debts are collected including arrears handling
  • payments to lead generators or brokers

Debt counselling, debt adjusting and credit information firms

Your business plan should explain:

  • plans to promote your debt management activities or other services (including any drafts you have)
  • your debt counselling process and copies of the documents you provide to the customers

Firms with Appointed Representatives (ARs)

Your business plan should explain:

  • the number and geographical spread of your ARs, how they will be recruited and monitored in their work, who will monitor them and what fees will be paid
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